File No. BAPCT-399
FEDERAL COMMUNICATIONS
COMMISSION
10 F.C.C.2d 100 (1967); 11
Rad. Reg. 2d (P & F) 211
RELEASE-NUMBER: FCC 67-1050
September 19, 1967 Adopted
BY THE COMMISSION: COMMISSIONER COX
DISSENTING AND ISSUING A STATEMENT IN WHICH COMMISSIONERS BARTLEY AND JOHNSON
JOIN; COMMISSIONERS LOEVINGER AND WADSWORTH CONCURRING AND ISSUING
STATEMENTS.
OPINION:
[*100] 1. The Commission has before it the above-captioned
assignment application, which proposes to assign the construction permit for
station WAFT-TV, Cleveland, Ohio, to WKBF, Inc. Assignee's stock is equally
owned by the assignor and present permittee, the Superior Broadcasting Corp.
and Kaiser Broadcasting Corp. In view of Kaiser Broadcasting Corp.'s
other interests in television stations in the top 50 television markets, the
application comes within the purview of the Interim Policy Concerning
Acquisition of Television Stations (5 R.R. 2d 271), enunciated June 21, 1965.
2. The Commission is of the view that the applicants have
affirmatively and compellingly shown that a grant of the application would be
consistent with the interim policy.
Accordingly, it is ordered, That the application for the assignment of
the construction permit for station WAFT-TV, Cleveland, Ohio, from the Superior
Broadcasting Corp. to WKBF, Inc., Is granted.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
CONCUR BY: LOEVINGER; WADSWORTH
CONCURRING STATEMENT OF COMMISSIONER LEE
LOEVINGER
This proceeding involves an application for approval of a transaction
that will, in effect, make the Kaiser Broadcasting Corp. a 50-percent owner of
an UHF construction permit for Cleveland, Ohio. There is no question as
to the qualifications of Kaiser and the transaction would probably be routinely
approved but for the proposed Commission rule to prohibit acquisition of more
than two VHF or three UHF television stations in the top 50 markets by any one
licensee. [*105] I agree with the dissenting opinion that
this case involves the underlying considerations and policy of our proposed
multiple ownership rule. Unfortunately, circumstances having no relevance
to this proceeding have precluded full Commission consideration and disposition
of the proposed multiple ownership rule prior to this and there is no prospect
of such consideration and disposition in the immediate future.
Developments, facts, and arguments coming to attention since the June
1965 proposal of the rule regarding television station ownership in the top 50
markets have caused me to doubt that the rule in the form proposed is the best
means of achieving the objectives sought. I do not wish to commit myself
to any position on this issue until we have had an opportunity for full
discussion and consideration within the Commission, and, therefore, will not
discuss the merits other than to say that for reasons indicated by Commissioner
Lee's dissenting opinion in the proposed rulemaking and my own prior opinion in
a similar situation it seems particularly dubious that we should impose a more
restrictive rule on the expansion of UHF interests at the time that we are
seeking to encourage the development of UHF.
In any event, I am unwilling to penalize the applicants here for the
Commission's delay in disposition of the basic rulemaking. In view of my
own doubts as to the basic policy, I am, therefore, concurring in Commission
approval of the proposed transfer, without committing myself to a position on multiple
ownership rule revision when that issue finally comes before the Commission for
plenary consideration and disposition.
CONCURRING STATEMENT OF COMMISSIONER JAMES J. WADSWORTH
I am concurring in a grant of this assignment because I believe that
the inauguration of a new television service in Cleveland at the earliest
possible date is in the public interest. I express my reservations that
the filing of an application, or multiple applications, by financially
qualified entities might be the vehicle for acquiring "paper CP's"
for resale to entities which would not have been able to acquire them in the
first place (because of lack of comparative qualifications, or otherwise),
which could result in a misuse (not necessarily abuse) of the Commission's
processes.
DISSENTING STATEMENT OF COMMISSIONER KENNETH A.
COX, IN WHICH COMMISIONERS BARTLEY AND JOHNSON JOIN
I dissent. This represents the most extreme departure the
majority has made thus far from our interim policy against increasing
concentration in the major markets. It seems to me that this is almost a
point of no return insofar as our pending rulemaking is concerned.
It should be remembered that we instituted our rulemaking proceedings
in docket No. 16068 over 2 years ago because of our concern over the
increasingly narrow concentration of control over television facilities
[*101] in the largest markets. We found it difficult, if not
impossible, to stem this trend in the course of case-by-case consideration of
individual transfer applications. We, therefore, decided to attack the problem
on an overall basis through rulemaking. Furthermore, we were so concerned
about the accelerating trend toward tighter and tighter control of the stations
serving the great bulk of our people that we took the unusual step, some 6
months before issuing our rulemaking proposal, of announcing that as a matter
of interim policy we would not authorize the acquisition of a second VHF
station in the top 50 markets without a hearing unless "a compelling
affirmative showing" were made that the transfer would be in the public
interest. When we later issued our now pending proposal for changing our
rules, we relaxed this interim policy to the extent of permitting the holding
of two VHF stations in the major markets before applying the hearing
requirement.
That has been our stated policy for over 2 years. We have granted
four waivers in that period (all but one of them over my dissent). But
all of those cases involved stations which had lost substantial sums and were
in precarious condition -- and one was actually off the air. Furthermore,
at least some showing was made in each case that the transferor had first tried
to sell to a party whose acquisition of the station would not violate the
interim policy before completing a sale to multiple owner. Thus, in these
past cases it could be argued that the public was assured a service which
otherwise was, or might be, unavailable to it but for the transfer.
However, neither of these conditions exists here. The station has
never been built, so has suffered no losses which might imperil its continued
operation. The Commission has always been concerned about the transfer of
bare construction permits, and that concern should certainly be present
here. I believe that WAFT-TV's pending application for extension of
completion date, file No. BMPCT-6410, should be set for evidentiary hearing to
determine first whether valid reasons exist for such extension of the
construction permit and, accordingly, whether there is a valid and subsisting
construction permit which WAFT-TV could transfer. As to the merits of the
proposed transfer, certainly no showing has been made that the transferor tried
to sell to parties already owning not more than one station in the top 50
markets. It presumably decided to sell to Kaiser because this was the
most favorable arrangement it could make for the disposition of its permit,
even though this brings it into conflict with our interim policy.
It should be noted that there were originally three applicants for this
channel. The other two dismissed their applications -- one of them,
United Artists, presumably because it realized that it would be at a
comparative disadvantage vis-a-vis Superior on grounds of diversity, local
residence, and integration of ownership and management. Even though this
left Superior as the only applicant, we required the latter to go through a
hearing to establish its financial qualifications. After the Commission
has thus gone to the trouble and expense of determining that Superior has the
resources to build and operate its proposed station in Cleveland, the applicant
now comes in and say s that its proposal was not substantial enough to serve
the public properly and that it should, therefore, be allowed to sell its
permit to Kaiser, which [*102] has greater resources and can put
together a more elaborate broadcast operation. In fact, this is one of
the main reasons urged in support of the parties' request for a waiver of our
interim policy. On the contrary, however, it seems to me that if
Superior -- while still in permittee status -- is saying that its
proposal was inadequate and that it is not financially qualified to build and
operate the kind of station which is needed, then it should be found to be
unqualified and its permit should be canceled. We would then be in a
position to accept further applications from parties able to build the kind of
facility Superior now says is needed -- and hopefully some of them might meet
our interim policy.
It seems highly unlikely that Kaiser would apply in such a
situation. It already has stations or construction permits in the Los
Angeles, Philadelphia, Boston, Detroit, and San Francisco television
markets. It thus has present holdings in the top 50 markets far in excess
of those permitted under our interim policy, by virtue of the fact that it
applied for a number of these facilities before we adopted the policy and
because the Commission has already waived the policy for Kaiser once to permit
it to acquire a half interest in a UHF station in Boston. n1 It really seems to me that it is rather presumptuous in pressing for
still further erosion of our policy on diversification.
n1 See my dissent to that action.
Public notice of Oct. 21, 1966, report No. 6193.
But our interim policy aside, these holdings would place Kaiser at a
serious comparative disadvantage if it were to seek to compete with local
applicants or with smaller multiple owners. Thus, we have here the
situation which has plagued us so often -- and has recently caused expressions
of concern in Congress -- namely, the transfer of a permit or license to a
party who could not have prevailed in a comparative proceeding, and here the
transfer takes place before the station has been built. If the parties
are correct in saying that the public interest requires the initial
construction of extremely high powered UHF stations, and that only multiple
owners with strong financing and previous UHF experience can build and operate
such facilities, then it seems to me the majority should move to amend our
rules to increase the minimum power required for UHF operation and to modify
our comparative hearing criteria to delete all demerit for concentration of
control of the mass media. I am quite sure that my colleagues are not
prepared thus unequivocally to make big city UHF operation exclusively a
millionaires' preserve, but if they intend to give others the benefit of the
precedent here established, I think this is exactly what they will accomplish
by indirection.
Maybe Superior cannot build as powerful a station alone as it can in
association with Kaiser -- and with the latter providing nearly all the
money. But when we issued our proposed rulemaking we expressly stated
that the resources of the multiple owners are not needed to bring UHF service
to the major markets, and in this case we have a full hearing record to
establish that Superior can build and operate a station which would serve the
public interest. I submit that the public in Cleveland would be better
served in the long run by a locally owned and oriented station which started
slowly and built as it went along, [*103] than it will be by a
better financed initial operation controlled by an absentee corporation with
significant other broadcast interests. Similarly, the national interest
in a diversely owned broadcast system would be better served by denial of this
application. Once the all-channel law achieves 100 percent UHF
penetration, then presumably a high-powered UHF station will be competitively
equal to a VHF station. When that day comes, Kaiser will have -- if this
acquisition is approved -- stations in six of the top eight markets in the
country, which is more than any other entity now controls. And when that
comes about, it is highly unlikely that the Commission will require divestiture
of such highly concentrated holdings, so that we will be faced with an
irreversible centralization of control over our vital mass media. I think
this is of critical importance, and that we must look ahead and consider this
future before we take the easy route of approving this application on the
ground that it will help UHF n2 or
that it will provide better service quicker than would otherwise be the case.
n2 I favor expanded UHF service like my
colleagues, but I think we sometimes fall into the error of allowing almost
anything in the name of UHF. We should not be emotionally predisposed to
accept every argument which seeks to use UHF's cause for short-range private
benefit.
Furthermore, the parties argue their case in a way which makes it clear
that they think what we do here will have important precedental effect.
In a letter of July 3, 1967, to the Commission from counsel for WKBF, Inc.,
they say:
The Commission's action on the WKBF, Inc., application will speak
loudly and clearly to others who may be contemplating investment in independent
UHF as to the degree to which the Commission encourages or discourages
initiative of the kind displayed by Kaiser.
I am quite willing to recognize -- and applaud -- the commitment and
the contributions which Kaiser has made to independent UHF operation. But
I am not willing to give it as many stations as it may desire in the top
markets, nor to issue ringing assurances to others that, if only they have the
money to take the initial risks, they, too, can count on a handful of stations
in the largest markets available. We initiated our interim policy on
December 18, 1964, because of the high degree of concentration then existing in
the top 50 markets, with 111 (or 71 percent) of the 156 VHF stations in those
markets licensed to multiple owners, while 17 of the remaining 45 were owned by
local newspapers. It is clear that our principal drive was to prevent a
repetition of this in UHF, yet this and our earlier waivers are taking us down
that same road. I am advised that there are only 28 channels still
available in the top 50 markets. It seems to me that we must act -- and
quickly -- if we are to maintain a desirable diversity of control of our
television system.
The parties' other principal argument is that approval of this transfer
will improve the possibility of Kaiser's developing a fourth network.
This is concededly speculative, and I do not think it can serve as a basis for
our action here. Clearly, we cannot select Kaiser as a chosen instrument
for the creation of a new network. Therefore, if this argument has any
validity we would be compelled to let all other multiple owners who indicated
that they were exploring network possibilities have as many stations as
Kaiser. Furthermore, this argument is not [*104] cast in
terms of need for revenues from owned and operated stations but rather in terms
of obtaining clearances for network programming. This obviously applies
to more than six markets, so could be made the basis for still further
acquisitions. I agree that we should pursue policies which would permit
the development of additional networks as they are needed and feasible.
But this does not mean that we should subvert other policies on the off chance
that an applicant before us may at some indefinite time desire to form a
network. If such a network comes into existence, an independent station
in Cleveland operated by Superior would have strong incentives to affiliate
with it and clear for its programs. We do not have to permit Kaiser to
control another station in a major market to achieve that result.
I have referred to the parties' contentions at some length because the
majority's order does not even recite them. It simply announces the
conclusion "that the applicants have affirmatively and compellingly shown
that a grant of the application would be consistent with the interim
policy," without any supporting explanation whatsoever. I think this
is not a proper way to dispose of matters of this importance.
I wish to emphasize again that this action goes further than the
majority has ever gone before in these waiver cases. It allows Superior
to avoid the risks of implementing the permit we have granted it, and at the
same time permits it to acquire a half interest in a much more substantial
venture for much less money than it originally committed to this
enterprise. It sanctions the acquisition by Kaiser of a franchise it
probably could not otherwise obtain. It distorts our comparative hearing
rules. But, above all, I think it undercuts, if it does not destroy, our
pending rulemaking proposal in the critical area of diversity of control of the
broadcast media. Perhaps the majority will eventually abandon that
proposal but, if so, that action should be taken consciously and for stated
reasons after full consideration of the problem. It should not be slipped
into, without explanation, in the course of disposing of particular
applications on an ad hoc basis, thereby creating precedents which must control
future actions, unless we are to be completely arbitrary and treat others
differently than we treat Kaiser.
I think this matter is of great importance, far transcending the
interests of these parties, the interest of the people of Cleveland in maximum
service at the earliest moment, or the interest of the public generally in a
strictly speculative fourth network. I do not think the majority has
addressed itself to the long-range problem of increasingly centralized control
of the makers of American opinion. I, therefore, dissent.